How Does Risk Selection Respond to Risk Adjustment? Evidence from the Medicare Advantage Program

@article{Brown2014HowDR,
  title={How Does Risk Selection Respond to Risk Adjustment? Evidence from the Medicare Advantage Program},
  author={Jason Brown and M. Duggan and I. Kuziemko and William A Woolston},
  journal={Health Economics eJournal},
  year={2014}
}
To combat adverse selection, governments increasingly base payments to health plans and providers on enrollees’ scores from risk-adjustment formulae. In 2004, Medicare began to risk-adjust capitation payments to private Medicare Advantage (MA) plans to reduce selection-driven overpayments. But because the variance of medical costs increases with the predicted mean, incentivizing enrollment of individuals with higher scores can increase the scope for enrolling "overpriced" individuals with costs… Expand
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